Question 3 A. You are thinking about investing your money in the stock market. You have the following two (2) stocks in mind stock SOS and AMG. You know that the economy is expected to behave according to the following table. You believe the likelihood of each scenario is identical (all states of nature have equal probabilities). You also know the following about your two stocks: SOS AMG -20% 5% State of the Economy Depression Recession Normal Boom 10% 20. 30% -12% 50% 9. 111 Calculate the stock's: i Expected Return (5 marks) 11. Standard Deviation (7 marks) Coefficient of variation 13 marks) B. Using the following information: Risk-free rate is 2% Expected market retum is 10% Risk measure of the stock is 2. i Calculate the Stocks Require Rate of Retum. 13 marks) If the stock's beta was 13, what would be the new required rate of return? (2 marks) . 11